Global airfreight outlook revised from black to red

The troubled international cargo airline industry is facing fiercer headwinds this year, theInternational Air Transport Association (IATA) said in its latest revised outlook for 2012.

IATA further tempered its forecast for this year, saying the sector is expected to book negative growth from the nearly flat growth the association predicted in June.

From a 0.3 percent expansion predicted in June, cargo is now expected to finish 2012 with a 0.4 percent contraction on 2011 levels, IATA said in an October 1 statement.

For the first eight months of the year, cargo capacity grew by 3 percentage points ahead of demand. With about half of air freight traveling in the bellies of passenger aircraft, matching cargo capacity to demand is challenging, it added.

“The weaker supply/demand environment has led to a more pessimistic outlook for cargo yields which are expected to average at 2 percent below 2011 levels (the previous forecast was for flat growth),” it said.

Said Tony Tyler, IATA’s director general and CEO, “The European sovereign debt crisis lingers on. China continues to moderate its growth. And the impact of recent quantitative easing in Japan and the US will take time to yield growth. While some of these risks have diminished slightly over recent months, they continue to take their toll on business confidence.”

With a 40 percent share of the global cargo market, Asia-Pacific carriers are the most exposed to the weak cargo demand. Over the first eight months of the year, regional cargo demand was down 6.6 percent on previous year levels, while capacity was trimmed by just 2 percent.

In its first look at 2013, IATA says cargo markets will see yields fall by 1.5 percent, despite expanding with strengthening world trade (forecast to grow at 5.1 percent, ahead of the 3.4 percent growth expected in 2012). Asia-Pacific carriers will see a profitability boost from improved cargo volumes, if not yields.